Monday, February 28, 2011

I don't think brain drain is a "problem". Anywhere. However, some places do face greater challenges considering the educational attainment rate of the workforce. A little digging into the numbers can put the issue in proper perspective. But the myth persists:

High atop the Encore on 7th Downtown, Jamie Seabrook, 25, shares a 1,137-square-foot, two-bedroom apartment with Olivia Benson, 25, a longtime college friend she met during minority pre-orientation at Carnegie Mellon University, and her two attention-loving cats, Abi and Min.

Ms. Seabrook, originally from Westchester, N.Y., and Ms. Benson of Aliquippa, are exceptions to the Pittsburgh "brain drain" -- the city's reputation for attracting students to its 11 colleges and universities, but losing them four years later to a stagnant area job market.

Columbus has the most educated cohorts generally. Across the country, state capitals often have unusually high educational attainment. This is especially true if they are home to a large state university, as is Columbus. The Pittsburgh trend is remarkable. Among older Pittsburgh residents, education levels are below the national average, like those of Cincinnati and Cleveland. For residents younger than 40, however, degree attainment jumps up to the levels of Columbus. If the highly educated cohorts in Pittsburgh continue to phase in, the city will eventually have a workforce like a university town rather than a former industrial center. Cincinnati, Cleveland, and Toledo can also anticipate modestly rising education levels based on cohort replacement. The education levels in the Dayton and Youngstown areas are essentially the same across the age cohorts, so these areas may not experience any rise due to the phasing in of more educated young people.

Click on the image to make the graph larger and more legible. What you will see is a big increase in native graduates. In other words, significant talent retention. The narrative associated with the graph:

Next, I looked at the six largest metro areas in the Fourth District in terms of whether their graduates and nongraduates were native to the state (“natives”) or whether they had moved in from another U.S. state (“migrants”) or outside the country (“immigrants”). Across the board, every metro area has more native college graduates in 2008 than it had in 2000. Cincinnati and Columbus have 29 percent and 27 percent more native graduates, respectively. Pittsburgh added 17 percent and Cleveland added 15 percent to their native graduate counts over the period. Gains among the immigrant graduate populations were also substantial. Cleveland-Akron and Columbus both had over 13,000 more immigrant graduates in 2008 than they had in 2000. Pittsburgh added approximately 9,600 immigrant graduates. However, in terms of attracting interstate migrant college graduates, all of the large Fourth District metro areas lag the national average, with the exception of Columbus. The national average in this category is 11.9 percent of the workforce. In Cleveland, the figure is 7.7 percent and in Pittsburgh, it is 6.8 percent.

In fact, the dominant trend for the Fourth District is strong retention and lagging domestic attraction of college graduates. (Ohio Governor John Kasich scapegoating brain drain for the the state's woes is an unfounded assertion.) The outlier is, of course, Columbus. Pittsburgh is catching up to Columbus without the benefit of strong inmigration and being the state capital (not to mention the absence of a flagship state university). Furthermore, as Bill Testa has offered, Columbus started off in a much better position than Pittsburgh.

If you think Pittsburgh is receiving good press now, then just wait a few years. The accolades will be as nauseating as another Steelers Super Bowl victory. The boom will benefit the entire TechBelt. That's the proximity dividend that you see in Northeastern PA thanks to nearby New York and Philadelphia. The Fourth District has long lacked a metro engine for economic growth. Pittsburgh is on the cusp of taking on that role for the region.

Eventually, the concentration of college graduates attracts graduates from other places. This positive feedback loop is partly why the world is spiky and a handful of cities are perennial winners in the war for talent. Town and gown Pittsburgh will start looking like the next Boston, dominating a region about the size of New England. The sphere of influence will stretch to Detroit and up against the gravity of Chicagoland.

I anticipate that no one else out there thinks the above will happen. The rise in Pittsburgh's educational attainment and per capita income are no less fantastic. I would submit that the numbers are unbelievable, incredible. Pittsburgh is the Marcellus Shale of talent. Eventually, businesses will figure that out.

Trevett and Sarah Hooper, husband and wife restaurateurs, were pioneers in 2007 when they opened Legume (1113 South Braddock Avenue; 412-371-1815; legumebistro.com), one of the city’s first independently owned restaurants with a focus on local food. This spring, the popular 34-seat bistro, where Mr. Hooper is chef, will move to a larger space in Pittsburgh’s Oakland neighborhood. In addition to buying from area farmers, he said he hopes to do more whole-animal cooking in the new space.

Chefs like Mr. Hooper, who moved to Pittsburgh from San Diego, do face challenges. Compared with a decade ago, the local foods infrastructure has improved, he said. But unlike farms in Southern California, those in western Pennsylvania geared toward working directly with restaurants are still rare. “It’s much easier to be a local chef-purist in a temperate climate with a critical mass of wealthy patrons willing to pay top dollar for high quality,” Mr. Hooper said. “That’s not the reality in Pittsburgh.”

After cooking in California for five years, Chef Trevett Hooper and his wife Sarah returned to Pittsburgh to launch Legume. The East Enders love running a restaurant near a movie theater, coffee shop and like-minded businesses. “We wanted to be in a pedestrian friendly area with lots of independent businesses. The community is very active in keeping it like that. It’s four diverse communities coming together,” says Sarah Hooper, who hopes to draw patrons from Edgewood, Swissvale and Wilkinsburg. “We were able to find enough investors--it all came together quickly.”

Working with Joy Robison, the Hoopers oversaw a complete renovation of the space. The brown and orange bistro features tile floors, tin ceilings and 19th-century lithographs. For illumination, the Hoopers turned to Construction Junction, where they found vintage schoolhouse lighting. “It has the feel of an intimate European bistro,” says Hooper, a Pittsburgh native who works for the Rand Corporation.

From what I can gather via Google, Trevett and Sarah met at Oberlin. He decided to be a chef instead of a musician. He followed Sarah to Pittsburgh, where he got his start in the restaurant industry. Why the couple left would be a useful tale. Regardless, they did the boomerang and opened Legume.

The NYT article indicates that the Hoopers took what they learned in Southern California and applied it in Pittsburgh, trying their hand at playing entrepreneur. Long-distant migrants tend to be risk-takers. And talented women in particular tend to be highly motivated to return home. This kind of migration can help Obama's recent praise of Cleveland ring more true:

"You've been working to reinvent the Rust Belt as the Tech Belt," he said. "Your universities, your hospitals, entrepreneurs, businesses have all teamed up to get biotechnology and clean energy from imagination to reality, and as a consequence, you've made Cleveland an emerging global leader in both fields."

Rebecca Bagley, president and CEO of NorTech, which focuses on technology and economic development in the region, said the administration understood "the story of Northeast Ohio, an economy in transition, with a great base, but with particular challenges."

"They're taking the stories of Northeast Ohio all over the country and they're using it to help form and drive policies in Washington D.C.," Bagley said, adding that she's been in regular contact with the White House to raise awareness of the assets of the region, whose economy has been hit hard since the recession.

One of those stories that the White House will soon be telling is one of boomerang migration and how it can catalyze an innovation economy.

Friday, February 25, 2011

Relocation decisions hinge on knowledge of place. We decide to move to another region primarily for economic reasons. Where we reside in that region is a matter of mesofacts. Because our perceptions of certain geographies are slow to change (if they change at all), there is a glut of arbitrage opportunities. You can find a quality residence in a quality neighborhood on the cheap.

I tell him Im planning on doing a road trip to Cleveland to check out some properties.

I explain to him that there are properties there going from 35K and up. He's going to be a RE agent in OZ and he just freaked out when I told him. He just could not believe how low the prices were.

So then he asks me: "Why do you want to buy there? Who's gonna rent from you if everyone can buy?"

My only answer was that I assumed people in the area had bad credit?

Then I realized how bad that generalization was.

But can someone explain this to me? I guess he had a valid point. I guess vacancies are higher in those areas but since you can purchase at such a low price, its still worth it.

Who is renting these properties?

thanks

That message board poster is from Seattle. Rust Belt markets such as Cleveland are opaque places. People know very little about the neighborhoods there. The entire megaregion is a black box. Investment just about anyplace is a tremendous risk.

Now think about this from the perspective of talent. Even if you knew there were jobs available in Shittsburgh, would you move there? You would more likely go to Portland despite the high unemployment. That's the problem with Rust Belt cities marketing themselves as inexpensive places with lost-cost housing. Talent already understands this and continues to head elsewhere.

Glaeser concludes that Detroit has spent too much upgrading its infrastructure -- note the beautiful, but empty, people mover -- and not enough on its people. But there might be a reason for that. If you build a train in Detroit, you can be pretty sure it'll stay in Detroit. You can't say the same for its residents. Consider this study examining the way one state's investment in education can end up benefiting a more desirable neighbor. "Massachusetts, California, or New Jersey may benefit more from an investment in Mississippi’s research universities than Mississippi does," the authors concluded. Education, in other words, gives people the option to leave. And they take it.

The question for Detroit, then, isn't just about making investments in human capital, but about keeping the humans around long enough to see some returns on those investments. So what does Detroit have over New York or Washington or Portland? It's not weather, potential income, safety, or school quality -- the normal markers of comfort and opportunity. Perhaps it's the pride of place, and the emotional appeal of a resurrection narrative, that we saw in the ad Chrysler ran during the Super Bowl. Or perhaps I'm just grasping at straws.

No, Klein isn't grasping at straws. It is pride of place that informs Talent Glut Pittsburgh. It's also Rust Belt Chic that is luring human capital to Detroit without a job in hand.

I think of Pittsburgh as the anti-Portland. The cities are surprisingly similar. How each metro got to the point of commonality is strikingly different. For example, the glut of talent:

Oregon economist Christian Kaylor says he can think of only one explanation for the migration into Portland: the quality of life.

Kaylor says wages there are sometimes 20 percent lower than in Seattle or San Francisco. But people keep coming. In fact, Portland's appeal is part of why the city's unemployment rate tends to be about a point higher than the national average.

Portland keeps pulling in the brains while Pittsburgh doesn't let them get away. The point of commonality is that both regions have an oversupply of what firms want, skilled workers. That's why I'm bullish on Portland and Pittsburgh.

I stumbled upon the above NPR story via a blog post at the Oregon Business Report. The blogger remarks about all the talent available in Portland. The depressed wages and high unemployment are positive indicators, not negative ones. The last paragraph, unrelated to the talent migration, is what inspired my own post:

Anyway, when thinking about the path that led us to the Portland that is now the media darling. I always think about the downtrodden, blue-collar city of my youth that specialized in cheap, home-grown diversions. It was a great place to be a college student or aimless twenty-something even then, as rents were incredibly cheap, you could go to the Mission Theatre for free and then spend your few dollars on local beer. What more could you want? I think that these trends start slowly and then gain feedback momentum and this is where my consciousness begins – Portland in the early 80s. Looking back we look for big answers, but often the roots are humble.

I see a lot of Pittsburgh in that narrative and the reason why I am much more bullish on the Steel City than on the City of Roses. Pittsburgh can and will attract talent in droves, sooner than you think. As for Portland, it has a long way to go in developing talent. As Edward Glaeser recently remarked, talent can leave just as quickly as it arrived. That's something for a tech business to mull over when weighing relocation options.

I note a swath of relatively good news stretching from Columbus, Ohio to Washington, DC. This is the exception to the Rust Belt rule that the Bureau mentions as "particularly hard" hit. Looking more closely at the Pittsburgh GDP numbers (Millions of Dollars):

2006: 103,504

2007: 108,386

2008: 111,738

2009: 111,597

Pittsburgh's metro economy contracted slightly from 2008 to 2009. I expect 2010 will be a return to growth and surpass the 2008 peak. I'll be interested to see how Pittsburgh compares in terms of recovery. We already know that Pittsburgh fared well during the recession. But the speed with which the region leaves its nadir will have a lot to say about the ability to attract migrants searching for opportunity.

Tuesday, February 22, 2011

The White House and U.S. Small Business Administration confirmed Tuesday that Boulder will be one of eight cities where senior administration officials will meet with entrepreneurs as part of the Startup America initiative. ...

... The first “Startup America: Reducing Barriers” roundtable will be held in Durham, N.C., on March 3. Another will be held in Austin, Texas, March 12 to coincide with the annual South by Southwest festival.

Other roundtables will be held in Boston, Silicon Valley, Atlanta, Pittsburgh and Minneapolis.

To begin with, if we’re to rebuild our city, we need these kids to succeed. I recently wrote an article that examined whether we have a brain-drain problem — losing our best and brightest to out-of-state schools and other cities such as New York and San Francisco.

The short answer is that, yes, this is happening, but geographer and economic development expert Jim Russell delivered an important insight: Sure, the elite kids will leave, but you should be proud that you’ve given them the education and skills to find success elsewhere and let them go, because they’re going to go anyway.

Where you should focus your attention, Russell said, is on the diamonds-in-the-rough, the first-in-the-family to go college, who will be grateful for the opportunity you’ve given them and stay home and help build a new Las Vegas.

Education levels can change far more quickly at the city level than at the nation level because of migration. A city can attract skilled, entrepreneurial people in much less time than it can produce them and, unfortunately, a city can also lose important parts of its human capital base with astonishing rapidity.

I referenced that passage last week. Las Vegas can set about producing skilled, entrepreneurial people. That's a dividend worth seeking. It's also a tough sell politically. Voters from 40-years in the future aren't going to keep you in office. Naturally, regions turn to talent retention. That will get you reelected.

Glaeser doesn't suggest plugging the brain drain as a way for Detroit to move forward. It's all about attraction, the quick fix. Both Detroit and Las Vegas can benefit from this policy wisdom. Develop the diamonds-in-the-rough. Design a city that entices people to move there.

UM Senior Research Specialist Don Grimes presented his study of the migration patterns of the college-aged population — 17-21 years old. From 2001 to 2004, Michigan lost 72,000 young people in that demographic, according to the research. Illinois, on the other hand, gained 13,354 during that same time period. Washington had the greatest increase: nearly 57,000 people.

But Grimes' realization during the conference that some of the audience members felt an inclination to leave the state, explore and then come back gave the economist food for thought.

"Maybe they do need to leave and come back," Grimes said. "I'm interested to do research now on the rebounding of 27- to 31-year-olds."

A lot of young talent can develop via relocation. Geographic mobility is a form of economic development. It seems crazy because we are place-centric. We care more about the city than the residents. The terroir is what matters. We should be thinking about how the city helps to develop people, not how the people can develop the city.

Las Vegas is beginning the process of growing its diaspora. Detroit Nation already exists. Use that network to help develop the people of Southeastern Michigan. Strategically channel the return flow to enable the most distressed neighbors, not neighborhoods. Ready these folks for export. Detroit will rebuild the entire country.

At Penn College, students can take a three-week training course and become certified "roustabouts" -- laborers who work near drilling sites. They often work 14 days in a row and then have seven days off. They start out making between $15 and $20 an hour.

Almost all of the students in that program come from Pennsylvania, but there are exceptions.

"I had two graduates in one of the three-week courses that we did, they were from Las Vegas," said Penn College instructor John Harper. "They had lost their jobs. ... And they heard about this and came in here. They went to work the day they graduated."

I'd like to know how the course graduates from Las Vegas heard about the program. I'd call it a pioneer migration, a pathway once forged that will act as a pipeline of talent desperate for work. That's a watershed moment for the energy industry in Pennsylvania and Greater Pittsburgh, a metro that more closely resembles Calgary with each passing week:

Among the Cranberry-area Marcellus Shale players are Exco-North Coast Energy, a division of Texas-based Exco Resources. In 2009, Exco-North Coast Energy signed a seven-year lease on space in an RIDC Thorn Hill Industrial Park building that formerly housed Fore Systems Inc. and Marconi Corp.

Canadian-based Talisman Energy recently established a regional office in the Pennwood Commons development and announced plans to employ 125 people.

Shell also has a local presence, thanks to its 2010 acquisition of Warrendale-based East Resources.

“This area is the heart of the Marcellus Shale,” said Susan Balla, executive director of The Chamber, which serves the northern Pittsburgh, northern Allegheny County and Cranberry business corridors. “That’s why we’re seeing these companies establishing a presence here.”

The ability to source skilled labour, wherever it may be, is crucial in the oil and gas industry, which has faced intermittent labour shortages in recent years.

However, with a widespread requirement for specialist skills, sometimes difficult to source within the [European Economic Area (EEA)], it is vital to the health of the sector and the wider UK economy that immigration law take these challenges into account.

Part of this challenge is to ensure employers have sufficient flexibility to engage skilled non-EEA personnel when the need arises and without undue cost or delay. But in what some observers see as an attempt to appease the tabloid media, the Government has been accused of being more concerned about cutting net migration than safeguarding access to specialist skills.

Apartments have been one of the highlights of the city's favorable standing with national developers and investors.

"I get calls from developers and investors in areas outside the region interested in either building or buying apartments here," said Cynthia Kamin, CBRE senior vice president.

Occupancy has been in the 96 percent range, though she expects it may drop to 95.2 percent this year. Those numbers are welcome news to apartment owners, who don't provide the concessions in rent or other items as they had in the past, she said.

Rentals average between $886 and $894 per month, and Kamin believes it will increase to $899 per month this year.

Pittsburgh survived the national recession in better shape than most metropolitan areas, said Arthur F. Jones Jr., a senior economist at CBRE Econometric Advisors.

"The region's transition from an industrial economy to one of health care and office occupancy enabled the region to have a good year in 2010 with the promise of continued growth in 2011," he said.

In the city, both office space and apartments are doing well. I doubt it will ever be well enough to address public pensions. But I don't think saying that Pittsburgh is thriving is stretching the truth. The urban core is better off than most and that's in spite of the debt.

In this time of fiscal restraint, the playing field is much more level. For many cities, the problem is relatively new and acute. For Pittsburgh, it is the same crisis that has been around years (if not decades). Perhaps the region is running out of road to kick the can. The end is nigh. My guess is that city government played the shell game long enough for things to turn around. After a half-century of dramatic decline, the urban core is growing.

What holds the Rust Belt back, perhaps necessarily and inevitably, isn’t really the challenge of clearing brownfields and attracting new firms and residents. It is the challenge of history and culture that frames how one can imagine the future. Rust Belt chic is hip, to be sure, but it’s also all we’ve got, for now. Can you imagine a broadcast of Monday Night Football in Pittsburgh that does not feature video of steelmaking? Yet no steel is made in the City of Pittsburgh today, and only a modest amount of steel comes out of the region as a whole — nearly all of it specialty steel, not the giant pieces that framed bridges and skyscrapers. Who knows what Pittsburgh might become, even if it might become anything more than it is right now. But Pittsburgh has to find a way to put steel in its place, metaphorically speaking. To deal with places like Braddock without their becoming simply Steel Valley comeback stories.

Mike's concern applies equally well to the Chrysler ad I obsessed over last week. That is Detroit's "comeback story". How the ad resonated is the Rust Belt's comeback story. We pin our hopes on the revival of manufacturing. That America will, once again, make things.

I don't understand Rust Belt Chic in those terms. Nostalgia is part of it. It's also a matter of pride. Mostly, Rust Belt Chic is the possibility of the urban frontier. We are reinventing cities and developing a new economic paradigm. The future of American cosmopolitanism is in the parochial Rust Belt. It's more blank canvass than tired cliché.

Rust-belters in many ways should view the Rose City (and the Beaver State) as a beacon of hope–Oregon had one of its dominant industry (timber) utterly demolished two-and-a-half decades ago, and has (somewhat) successfully reinvented itself.

Both Seattle and Portland provide examples of how Rust Belt Chic doesn't have to drag down Pittsburgh's future. I lived in Olympia, Washington during the early 1990s. The natives were not thrilled with the influx of outsiders. Grunge was considered local music. I associated it with lumber towns such as Hoquiam. Kurt Cobain is from neighboring Aberdeen. You might have called his look "Lumberjack Chic". All of the above was neither here nor there concerning Seattle's boom or most livable Bremerton (1990).

The obvious joke here is that Alaskans traditionally have been behind a pair of dog teams—the ones in the Iditarod and the Seahawks.

Matt Hasselbeck has the facts. And he sounds eager to clue in the rest of the United States that there really is, believe it or not, a Seahawks Nation. And to let you know how much territory this covers, above and beyond our 48 contiguous states.

He wants you to appreciate, for example, that the Seahawks also own the state of Oregon. That they traditionally have a big scrimmage in Portland for all of those lumberjacks and Nike employees there whose only contact with pro football is a John Madden video game.

Really, based on everything else, the two make for strange bedfellows. Spend enough Internet search time tracking the connection of those terms, and you'll find the story from 1997, when then-Steelers linebacker Chad Brown fled in free agency to Seattle. His wife complained shortly thereafter to the media that Pittsburgh lacked the high-end culinary distinctions they looked for in a city. Like -- wait for it ... wait for it -- sushi.

Making prosciutto is the very old art of transforming a fresh leg of pork, well rubbed with salt, then hung in the air for many months to lose moisture, ferment a bit and gain flavor, into a revered ham with the texture of a silk tie and a complex aroma. It is a skill perfected in Italy's midsection, in the city of Parma.

The art also is a source of pride in Pittsburgh at Parma Sausage. Company founder Luigi Spinabella, 83, who was born near Parma, learned from his father to cure pork in this time-intensive way.

Two decades ago he got seriously into prosciutto-making.

Adding prosciutto to the store's popular lineup of sausages and cured pork products was a daring move in Western Pennsylvania in the 1990s. High-quality domestic prosciutto was almost unheard of. Few besides Italians and foodies had learned to savor the funky fragrance of the paper-thin sliced ham.

Chad Brown and his wife were too unsophisticated to appreciate such cuisine. Local delicacies are found in unorthodox (or, perhaps I should write "Orthodox") places such as churches or garages:

Pittsburgh Italians take this mystical rite in stride. This may be because so many have a “garage prosciutto” hanging in their suburban homes.

One such is Giuseppe DiBattista, 78, father of Vivo chef/owner Sam DiBattista.

“My parents’ generation arrived with what I call ‘World War II thrift,’ Sam says. They knew how to keep food without refrigeration by canning, drying, pickling, fermenting.” They were closer to their meat sources too. Sam remembers classmates coming home after school, “appalled to discover a bunch of dead rabbits hanging in the garage, the ones they’d been playing with the afternoon before.”

Note the history, the sense of pride. That's Rust Belt Chic and I don't see how it would hold the region back as outsiders learn to appreciate the same world Anthony Bourdain is making famous on his show "No Reservations". Go ahead and move to Seattle for the sushi. That city could use a few more people looking to buy a home. But come to Pittsburgh for the prosciutto. Wash it down with a Duquesne Pilsener, a fine example of looking forward through the past.

Any impressive rise in Pittsburgh metrics comes with a caveat. The gains were only possible after dramatic losses. At least, that's how I imagine the critics and cranks reacting to this news tidbit:

Honolulu posted the second-highest hotel rate increases among North American cities in the February Hotwire Hotel Rate Report.

The city's ranking, which came in behind Pittsburgh, was a step down from the top spot that it occupied in the January report.

I wouldn't take the Hotwire report to the bank. However, I would consider all the stories of hotel building going on in Pittsburgh over the last few years. I recall reading that the region is under-served in terms of capacity. I conclude that the supply isn't keeping up with the demand.

Chris Schoonmaker, vice president for sales at S&A Homes in Pennsylvania and West Virginia, said he has seen a spike in the number of people looking to buy custom-built homes in Pittsburgh and State College, Pa. But he doesn't expect to hire until the housing industry achieves a full-blown recovery.

Not just a counter-trend, but a "spike". This isn't a city in Sun Belt boom darling Texas. This is Pittsburgh, the Rust Belt. Must be smoke and mirrors, Southwestern PA suckling on the federal government teat. Eventually, people will come to their senses and move to Portland.

I've spent a lot of time touting what Pittsburgh has done with educational attainment. Not for nothing, per capital income has responded in the expected way. I concede that a shrinking population has something to do with those favorable numbers. But one shouldn't ignore increasingly brainy Pittsburgh, either.

Education levels can change far more quickly at the city level than at the nation level because of migration. A city can attract skilled, entrepreneurial people in much less time than it can produce them and, unfortunately, a city can also lose important parts of its human capital base with astonishing rapidity.

I believe that the best local economic development strategy, at whatever time frame, is to work on attracting smart, entrepreneurial people and then, more or less, get out of their way. But attracting smart people is never easy, especially for a troubled city like Detroit.

In Pittsburgh, education levels changed slowly. This has been a steady, half-century march away from manufacturing and towards a more diverse economy. Pittsburgh didn't attract talent. It produced it.

The Allegheny Conference on Community Development is working to capitalize on the Super Bowl-sized spotlight focused on the Pittsburgh Steelers and their hometown today by taking the ImaginePittsburgh.com campaign on the road.

The Allegheny Conference has special events planning in several markets with high concentrations of former Pittsburgh residents: Tampa, Fla., Charlotte, N.C., Washington, D.C., Phoenix, Boston, New York and Dallas.

The Allegheny Conference has been touting openings for a few years, but within a framework of talent retention. Early last summer, I made the following observation:

Pittsburgh can afford to gaze at its navel while mulling over workforce development. That's exactly the message communicated by LANXESS CEO and chair of the Allegheny Conference Workplace Committee Randy Dearth during a recent interview with OnQ. He's telling talent to stay put and find the opportunities that exist in the region. There is no urgency to attract workers. The main issue is better matching job seekers with available openings. The local demand for labor doesn't look to outstrip the supply any time soon.

The strategy seemed to be to encourage people to stay and keep looking for work. The jobs are there. You just have to find them. Now, the Allegheny Conference is actively recruiting talent in other markets. That's a big paradigm shift. The economic development wonks are signalling a shortage of employees in the Pittsburgh region. The local supply of talent no longer can meet the demand.

I repeat, Pittsburgh is actively recruiting outside of the region. The worm has finally turned.

Tuesday, February 15, 2011

"I know other young adults living in the [Boston-Washington] Corridor who, like me, are tiring of the 'rat race' already in our 20s and want to re-establish ourselves in cities like Pittsburgh so we can prepare to start our families in healthier overall environments with lower stress, less expense, and friendlier surroundings."

One message board post does not a trend make. But I make it my business to track similar proclamations and then see if these case studies start showing up in the data. Another story:

On Memorial Day 2007, my sister called from suburban Maryland shortly after I had returned from my early-morning run along the lakefront path. I didn't have any plans for the holiday, so I was looking forward to a relaxing, uneventful day.

That hope faded as soon as my sister, a single mother with three young sons at home, began talking. “The apartment leasing office sent me a letter. The rent is going up again! We can't afford to live in this area much longer.”

I nodded sympathetically. She knew that I had moved to Chicago less than two years before in part because I had never been able to rent a one-bedroom apartment in a safe neighborhood. In my 14 years in the D.C. area, I had lived in relatives' homes, boarding houses, a group home, a basement apartment and studios in high-rise buildings. Even though I was a 35-year-old professional, I was still living like a college student. ...

... “I'm not telling you not to move to Raleigh,” I clarified. “I simply want you to know all of your options before you make a decision. If Raleigh is the best place for you, then you should go there. But don't relocate there just because everyone else is. If you want, I can make a list of additional cities for you today.”

“I'd appreciate that.”

That afternoon, I e-mailed her that promised list. Ten months later, my sister and the boys boarded a Greyhound bus for a one-way trip headed not south, but west. Last February, she bought her dream house in Akron, a city once dubbed “The Rubber Capital of the World.” Her adopted hometown is now the center of the Polymer Valley.

Three months after the purchase, her home's value increased.

Everyone bailing on DC was heading to Raleigh. That's a classic migration pattern. People relocate with a herd mentality. Either you move not too far from your current residence or you go where everyone else is going. That's not exactly a rational choice and it should put the "vote with your feet" meme in proper perspective. Akron doesn't need Joe Cortright to tell it how to attract talent. Cortright should be figuring out how Portland can be more like Akron.

Vehorn had lived in Northern Virginia. He'd spent the '90s in Seattle. He and a friend considered moving to Pittsburgh. But Akron was cheaper than the Pacific Northwest and NoVa, and cooler than the Burgh. So Vehorn became an Akronite and small-business owner. He's a partner in Tangerine Sound Studios with Pat Carney, the drummer in the Black Keys, Akron's respected ambassadors to the international rock 'n' roll community.

Generally speaking, metros that score highly on our creativity index continue to perform well. Seattle and Portland remain up as do Denver and Atlanta. Boston and Minneapolis are down a but not too much. Places like Miami and Las Vegas are literally crashing and the outlook is bleak in Rustbelt centers like Detroit which never saw much appreciation to begin with. Before anyone says anything, LA does not score highly on the overall creativity index. Washington DC is really a tale of two housing markets: prices remain relatively stable in the city but are plummeting in the suburbs. San Francisco’s declines are modest.

In the last year, home prices in Seattle had a bigger decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix. ...

... It has been a long, painful slide. At the peak, a downturn in real estate in Seattle was nearly unthinkable. In September 2006, after prices started falling in many parts of the country but were still increasing here, The Seattle Times noted that the last time prices in the city dropped on a quarterly basis was during the severe recession of 1982.

Two local economists were quoted all but guaranteeing that Seattle was immune “if history is any indication.” A risk index from PMI Mortgage Insurance gave the odds of Seattle prices dropping at a negligible 11 percent.

These days, the mood here is chastened when not downright fatalistic. If a recovery depends on a belief in better times, that seems a long way off.

Clear Capital, a real estate research provider, says that while 35 out of the 50 largest real estate markets are expected to see home price declines in 2011, 15 of these markets are expected to rebound. Among those expected to rebound is Pittsburgh, where Clear Capital thinks home prices will rise by 0.8% in 2011.

Pittsburgh also made the list of markets that Zillow expects to thrive in 2011, since home prices already increased in 2010. Home prices in Pittsburgh rose by 1.1% from the third quarter to the fourth quarter of 2010, and rose by 1.2% when comparing December 2009 to December 2010. In addition, the foreclosure rate in Pittsburgh remained low at 0.471% in 2010.

Usual suspects such as Austin and Madison are also worth watching for value appreciation. Adding Pittsburgh to the list makes for one strange bedfellow. Dramatically outclassing the Seattle real estate market is downright shocking. Declining Seattle, Minneapolis, and Atlanta should cause us to rethink our understanding of US economic geography. Meanwhile, Pittsburgh continues to hum along and no one seems to know why.

Thursday, February 10, 2011

“Now we’re from America but this isn’t New York City or the Windy City or Sin City and we’re certainly no one’s Emerald City,” says the voiceover of a moving Superbowl ad that seemed to be about Detroit’s toughness and pride rather than about a luxury car.

The ad was a hit but I had just spent a week in Detroit meeting with friends and grantees in the midst of a snow storm that the locals shrugged off as “only” dropping 8-12 inches of snow.

So you need to hear me when I say that’s Detroit swag. There are people who LOVE Detroit! Young do-it-yourselfers are choosing this city over any place else because they are feeling Detroit.

20-something Emily Doerr, who plans to open a hostel in the city this spring, brims with affection when she says “Detroit is a gritty defiant place and it’s not like any other city. It’s beautiful but strong. Gritty, defiant, unique and cool is an attractive combination to young people.”

The Super Bowl commercial, then, is a shell game. Detroit’s pain isn’t the result of some existential crisis of faith, but a direct consequence of the amoral, profit-seeking behaviors of Chrysler itself. And the prospect of “taking pride” in producing luxury goods for the elite class of business professionals who benefited from this structural economic transformation is cold comfort to the millions of impoverished families trying to keep warm by the dying embers of an industry that no longer has any use for their deep-running know-how.

Karl Marx, that keen critic of class relations, called this sleight of hand “false consciousness,” and there’s something downright evil about the falseness of the promises made in Chrysler’s ad. Not only is pride out of the question, but economic rebirth certainly won’t happen just because wealthy and upper-middle-class Americans “believe” in our work force enough to purchase the goods they manufacture. The argument makes about as much sense as “trickle-down economics” (a term coined by another keen social critic, Will Rogers).

The truth is, working people don’t benefit by serving wealthy people; they benefit by organizing, and by serving themselves and one another. They find pride not in abstract and lofty ideals of American greatness, but in concrete and achievable accomplishments in their own lives and communities. Shame on anyone who allows himself to believe otherwise, and shame on Chrysler.

The problem is that the basic costs of all production have risen remarkably. There are the personnel expenses of all kinds -- for unskilled workers, for cadres, for top-level management. There are the costs incurred as producers pass on the costs of their production to the rest of us -- for detoxification, for renewal of resources, for infrastructure. And the democratization of the world has led to demands for more and more education, more and more health provisions, and more and more guarantees of lifetime income. To meet these demands, there has been a significant increase in taxation of all kinds. Together, these costs have risen beyond the point that permits serious capital accumulation. Why not then simply raise prices? Because there are limits beyond which one cannot push their level. It is called the elasticity of demand. The result is a growing profit squeeze, which is reaching a point where the game is not worth the candle.

The image on the opposite page is the Grand Hall in Michigan Central train station. That building might be the most iconic piece of Detroit's ruin porn. Crumbling "capitalist monuments" stand as proof that the "game is not worth the candle." The government bailout of Chrysler only extends the ruse, a house of cards that has lasted for 500 years.

What happened to Detroit will eventually blight the entire earth. Toughness and grit cannot save it. Like empires, all systems eventually die.

That's the Marxist critique, a powerful paradigm for explaining how the world works. Only the Freegans can save Detroit. Capitalism is out of answers. Eventually, every city and state will be bankrupt.

Tonight’s Super Bowl features two of the NFL’s oldest teams and the two perhaps most associated with their communities. They were named decades ago for the workers that once defined Pittsburgh and Green Bay: the steel workers and the meat packers. That began a connection that ran deeper than sports; it was a bond. Men raised their sons to follow them in the family business, and they taught them to love the same teams, too.

The match up as context helps to explain the tremendous impact of Chrysler's "Imported from Detroit" ad. (Read about the back-story in this Forbes blog post.) On the heels of President Obama's State of the Union address, I expect the Super Bowl to serve as a spark for a Rust Belt renaissance.

The league is also in the preservation business, exploiting our collective need for shared ancestral traditions, for deeper roots. The NFL is much less concerned about whether a city like Los Angeles, the nation’s second-largest metropolitan area, ever gets back in the game than it is about how to preserve franchises in lesser cities like Buffalo, Cleveland, Pittsburgh and Green Bay. These cities have declined in the real world, but, as an embodiment of certain ideals, they have never been more valuable to the NFL brand.

Football’s ethos, after all, was shaped by cold, broad-shouldered cities like Pittsburgh and Cleveland – cities that loom large in our narrative of shared origins. This isn’t only a question of geography, but also of values. In our elegiac imaginations, America’s fading industrial cities embody a back-to-basics work ethic and a determination to overcome adversity. (It’s no accident that Steeler and Packer jerseys are reliably among the top-selling NFL gear nationwide.)

That’s why fans all across Southern California routinely cram into Packer and Steeler bars, as they did again yesterday, to watch the games. Whether these California-based Steeler and Packer fans have personal links to Western Pennsylvania or Wisconsin or not, they have an aspirational link. It’s about yearning for a shared tradition and a grittier three-yards-and-a-cloud-of-dust version of life—not to mention single-digit temperatures in which you can see your own breath. These are spectacles best witnessed from a bar in L.A., of course, but spectacles that nonetheless link us to our past, and to one another.

Rust Belt talent and money built the Sun Belt. I'd go so far as to argue that the Rust Belt gave birth to globalization. Deep down, all Americans know that to be true. That's the power of the Rust Belt brand that so many shrinking cities have worked diligently to reject. (Baltimore being the best example)

The NFL is more perceptive. Green Bay and Pittsburgh are small markets. They are also global brands. I've long appreciated that Pittsburgh's image abroad is much better than it is domestically. It is the Rust Belt cities themselves that are slow on the uptake. Stop trying to be an emerald city.

Tuesday, February 08, 2011

But there's a lot to dislike here: the fact that a major bailout recipient is dishing beaucoup bucks for a one-off ad to boost its image; the cynical racism (or at least colonialism) of positioning Chrysler as a tough, gritty, 8 Mile-style brand that's perfect for what marketers call the "urban core" demographic; and using Detroit poverty porn to hawk your product while simultaneously trying to deride the media's recent Detroit poverty porn.

"Detroit's ascendancy mirrors Eminem's own struggles and accomplishments," Chrysler brand CEO and President Olivier Francois said in an e-mail to the AP. "This is not simply yet another celebrity in a TV spot. It has meaning. Like his music and story, the new Chrysler is 'Imported from Detroit' with pride."

Of course, the tagline is not without some irony: Italian automaker Fiat Group SpA now owns 25 percent of Chrysler, and the ad was produced by Wieden + Kennedy, a Portland, Ore.-based agency known for its work with Nike. Chrysler switched after its previous advertising agency, a famous firm called BBDO, closed its Detroit office.

Does Wieden + Kennedy ring a bell? Mother Jones went after the Nike connection. I immediately thought of the "Ready to Work" campaign that featured Braddock. In fact, the Chrysler ad seems similar in its use of Rust Belt Chic. The agency is located in Portland, OR and has its finger on the pulse of the urban frontier. The swipe at the emerald cities in the definition of Detroit cool is ironic.

The other thread running through the negative reaction to the Chrysler ad is Fiat's ownership stake and the US government bailout of the American auto company. Why are taxpayers propping up a foreign company?

The [Nike] shoe waiting to drop is Chrysler abandoning Detroit for Turin, Italy. We bail you out and then you spit in our face, raking in corporate profits. Detroit is left with only a sleek ad, 15-minutes of fame.

Sergio Marchionne, chief executive of Fiat and Chrysler, has been forced on the defensive after causing a political firestorm in Italy by suggesting he could move the Italian company’s headquarters from Turin to the US and saying Chrysler’s bail-out loans from the US government carried “shyster rates”.

His comments come just a month after he won tough labour concessions at Fiat’s flagship Turin plant on a pledge that he would not move production to cheaper sites in North America or eastern Europe.

Fiat is a symbol of Italy’s industrial might, and business leaders say any decision by Mr Marchionne to reduce its presence there would have a disastrous effect on the country’s already weak image as a place for foreign investment. Pierluigi Bersani, leader of the opposition Democratic party, demanding an explanation from Mr Marchionne said it was unacceptable for “Turin and the country to become a suburb of Detroit”.

The above is from yesterday's news cycle. After all is said and done, Turin might be the city left high-and-dry. Detroit will be the one stealing jobs from abroad. Of all the pontificating (good and bad) about the Super Bowl spot, not a single blog post or article mentions the shitstorm rising from Marchionne's comments. There is no consideration of the bigger picture.

"When I was elected, I thought I knew what was going on, but I got here and found out [that] in the short term, things were way worse than I ever imagined," Bing said. "Financially. Ethically. From a policy standpoint. We were on the brink of a financial calamity."

Twenty-one months into the job, that's where the city remains. With no salvation in sight, Bing, 67, has embarked on a mission few in his position have ever had to take on: dramatically shrinking a major American metropolis. To do so, Bing has issued an open invitation: anyone with a proposal, plan, theory - a notion, even - is welcome to try to save his crumbling city.

The people trying to save the city tended to respond positively to the Chrysler ad. Maybe poverty porn sells a few cars. But it can also rally many to the cause. The Mother Jones invective is what is postcolonial, exploitative. I'm from the Rust Belt. Don't tell me what the score is. I'm not being seduced by ruin porn and I'm not buying your lefty propaganda.

A crumbling Detroit is supposed to teach us how capitalism is evil. Those wielding Marxist theory want Detroit to fail. It is supposed to fail. The idea that nothing good can come from the promotion of consumerism is oppressive ideological thinking. I'm not interested in Mother Jones telling me what the ad means. I can decide for myself. I can be inspired and still point a damning finger at Chrysler. Doing so doesn't make me a hypocrite. It means I'm an active consumer of media. That cuts both ways as far as Mother Jones is concerned.

Detroit, the ad's gravel-voiced narrator reminds us, is a proud American city, distinct from New York City or the Windy City or Sin City, "and we're certainly no one's Emerald City." No, it's a place where real people make real things, and make them well. By extension Chrysler - which along with Ford and GM is so synonymous with Detroit - is a company where real people make real things, and make them well.

There is glory in grit and Detroit owns that brand. The city is more than unique. It is the anti-Portland. Governing on Rust Belt Chic:

Part of it is the scruffy, industrial look. It may also be a rejection of cities with gleaming condo towers, bistros and boutiques that were once so trendy yet now seem so frothy and fake in the wake of the economic meltdown.

I think that troubled cities often tragically misinterpret what’s coolest about themselves. They scramble for cure-alls, something that will “attract business”, always one convention center, one pedestrian mall or restaurant district away from revival. They miss their biggest, best and probably most marketable asset: their unique and slightly off-center character. Few people go to New Orleans because it’s a “normal” city — or a “perfect” or “safe” one. They go because it’s crazy, borderline dysfunctional, permissive, shabby, alcoholic and bat shit crazy — and because it looks like nowhere else. Cleveland is one of my favorite cities. I don’t arrive there with a smile on my face every time because of the Cleveland Philharmonic.

The last to realize the power of the Rust Belt brand to attract talent will be the shrinking cities themselves. They aspire to be the next Emerald City, an oasis in a desert of blight and abandonment. America's urban frontier is the future of this country, not the utopian escapism of Portland.

Sunday, February 06, 2011

"Steelers Nation is a worldwide community so it's time for the rest of the world, like us, to express our love for the Steelers in local flavors," says BlackMahal rapper and executive producer Vijay Chattha, a native of Weirton, WV, just 45 minutes from Pittsburgh's Heinz Field stadium.

""The new colors of the Pittsburgh Steelers are black, gold and silver," continues Chattha. "The Lombardi trophy and its silver sheen has become a standard of success in the team's historic franchise, so we wanted to celebrate our colors on the song."

""The song takes the classic black and gold colors of the Pittsburgh Steelers and adds the silver of the storied Lombardi Trophy, given to the winner of NFL Super Bowl. First there was 'Here We Go" by Roger Wood then "Black and Yellow" from Wiz Khalifa. Now BlackMahal unveils the first bhangra-infused anthem for football fans, "Black, Gold and Silver."

""The song features some dedications and samples of the late Steelers broadcaster and icon, Myron Cope as the band re-invents the, "Yoi, Yoi, and Double Yoi" catchphrase.

[The song] also introduces a new name for the team that sits at the confluence of the Monongahela, Alleghany and Ohio Rivers, translating them into 'thin-jabis' or "those from the three rivers."

Part P-Funk, part Punjabi-Funk, BlackMahal is a 10-piece live music experience complete with drums, DJs, horns, hip-hop MCs, and the godfather of Punjabi-American music – Ustad Lal Singh Bhatti.

BlackMahal's lead vocalist, Lal 'Blitz-Singh' Bhatti, is regarded as the godfather of Punjabi-American music. Bhatti has collaborated with the Black Eyed Peas, The Doors and has performed for nearly every U.S. President since Gerald Ford as well has being honored at the opening of the Smithsonian Sikh Gallery in 2005.

Step aside Boston, New York City, San Francisco and Seattle. Sorry, but you’re just not cool anymore. These days, you need to have crumbling roads, triple-decker apartment buildings, old-fashioned neighborhood bars and lots of rust to gain any hipster cred. When Anthony Bourdain, host of the trendy travel and food show No Reservations, passes up Tuscany, Provence and Barcelona to visit Baltimore, Buffalo and Detroit, you know the Rust Belt has arrived.

The "rust is chic" movement has been around for a while, but thanks to blogs and online magazines, such as RustWire.com, a certain fascination with places that have fallen on hard times like the Rust Belt -- which stretches from the Midwest through the mid-Atlantic and up into the Northeast -- has taken hold. Part of it is the scruffy, industrial look. It may also be a rejection of cities with gleaming condo towers, bistros and boutiques that were once so trendy yet now seem so frothy and fake in the wake of the economic meltdown.

Civic boosters are beginning to understand the attractive assets sitting in their own backyards. These are the same cities that Richard Florida disparaged as not cool enough to keep talent from heading to Austin. Don't be Pittsburgh or you will lose the war for talent. He couldn't have been more wrong.

Google is famous for forcing perfectly respectable people to work in studiedly zany offices -- themed ones, no less, whether it’s gondola lifts at Google Zurich or, as we saw recently, red telephone booths at Google London. So we were pretty wary when the architecture firm Strada sent us news of its freshly completed office for Google in Pittsburgh. We expected Terrible Towels in the bathroom and faux steel mills for meeting rooms. Happily, we were wrong. ...

... Strada did a good job of saying Pittsburgh without screaming it. The office fills the penthouse of a 100-year-old Nabisco factory, the history of which the architects took pains to spotlight. They left its guts raw, so you've got exposed pipes and peeled paint and gashes in the walls (from the gritty, rough-and-tumble Rust Belt work of making cookies).

Kudos to Google (and Strada) for passing muster with a design critic. Do check out the photos associated with the review. I think of the Pittsburgh office as a microcosm of what attracts talent to Rust Belt cities. The key is not following in the footsteps of Seattle or any other hipster boomtown with high marks in the Creativity Index. Cleveland already has what talent wants. It needn't hire Next Generation Consulting.

In recent years, Boston and New York have also become hotbeds of the tech sector, challenging Silicon Valley for talent. While the valley continues to lead the pack, its East Coast rivals have the added advantage of being closer to Canadian talent. The competition for that talent has, as a result, intensified, something that works in favour of Canadian startups.

Silicon Valley is experiencing a talent crisis and Google, to its credit, is staying ahead of the curve. Don't expect the mountain to continue to come to Mohammed. Or, should I write, "Mohammed coming to Mountain View"? I digress. The idea is to move where the talent is, not the other way around.

There is value in locating your startup near where the talent you need is produced. That's a big change from banking on everyone worth her salt relocating to the Bay Area. Every talent migration boomtown should be concerned (e.g. Boulder, Austin, and Seattle). If you need a steady supply of knowledge workers, then you would be better off in Youngstown.